Every year, 150 billion cubic metres of gas is burned off globally into the atmosphere through gas flaring. That represents about $21 billion of lost potential revenues.
To put it in context, the amount of gas flared is equivalent to the gas consumption of two of Europe’s largest markets – Germany and the United Kingdom.
At a time of low oil and gas prices, National Oil Companies, as the custodians of their countries’ natural resources, can extract value from flared gas and help bolster government revenues.
Capterio provides gas flaring solutions for energy companies to turn gas flares into revenue whilst lowering greenhouse gas emissions. Find out how we do it.
With 1.2 billion tons of CO2-equivalent (CO2e) emissions every year, the environmental impact of gas flaring is on par with the total emissions of the entire aviation sector.
Greenhouse gas emissions from flaring are principally CO2 with some methane (CH4). In addition to the 150 billion cubic metres of gas flared each year, perhaps another 17 BCM is released as CH4 due to incomplete combustion, and a further 116 BCM through venting and leaking. Methane has a significantly greater warming effect than CO2. So at lower combustion efficiencies, the CO2e emissions of flares are significantly higher.
The carbon intensity of natural gas is about half that of coal and around 25% lower than liquid fossil fuels. It is therefore widely viewed as a critical fuel to enable the ongoing decarbonisation of our global energy systems, supporting the shift from coal. But unless the issue of methane emissions is solved, natural gas will be neither a transition, nor a destination, fuel.
Flare capture can add reserves and production immediately, with near zero risk, at low unit development cost. The net emissions from delivering more energy to the market is virtually zero, enabling countries to make a meaningful contribution to meeting their Paris Climate Agreement commitments. Flare abatement for countries and companies with significant flaring creates an easy-to-implement economic and environmental win-win.
As Europe decarbonises, demand – in addition to price premiums – will likely be greater for products with lower greenhouse gas intensity. Without tackling the flaring problem, especially given an abundance of supply sources to the region, Europe’s proximal hydrocarbon suppliers may lose some of their natural advantages to more remote suppliers due to higher greenhouse gas intensity. That would potentially result in a loss of market share for the more proximal suppliers and maybe also even drive up prices for European consumers.
Investors are shifting capital allocation to low carbon investments. Carbon intensity is therefore an increasingly critical point of differentiation for oil majors to attract capital and generate value. Companies are formulating their long-term strategies and executive remuneration around carbon intensity and emissions performance. These decisions enhance environmental and social license to operate, ensuring continued access to financing, and might also provide financial advantage in the future. In countries that begin to levy carbon taxes, low carbon intensity will likely translate to price advantages for companies.